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Nortel - Settlement Statement by UK Trustee

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The Trustee of the UK Nortel pension scheme is very pleased that a settlement of the long and bitter dispute over Nortel's residual assets is finally within sight.

It was revealed last night that a consensus has been reached between key stakeholders, including the Trustee, as to how to allocate the $7bn residual Nortel assets—"the Lockbox".

The agreement is conditional on creditor support in both the US and Canada and court approvals in the US, Canada, and a number of other jurisdictions including the UK.

It is seven years since global communications giant Nortel entered world-wide insolvency. After multiple mediations, and years of what the Courts have described as "scorched earth litigation" the parties have finally come together.

Underlying the present position was the ground-breaking decision issued in May 2015 by Judges in both Delaware and Toronto that creditors everywhere would share on an equal footing in the $7bn residual assets in the Lockbox. Their decisions were based on the argument put forward by the Trustee and were favourable to the 33,000 Nortel UK pensioners who were left stranded with a huge deficit in their pension scheme when the telecoms giant entered bankruptcy in 2009. It was the first time assets in an international insolvency had been ordered to be distributed in this way.

Multiple appeals were subsequently launched against the allocation judgments. At the same time, the parties embarked on negotiations which have continued ever since, in a last ditch effort to resolve the dispute.

The deal announced last night is the culmination of over a year's discussions and an eventual compromise of all parties' positions in order to reach the goal of delivering funds to creditors. It will be welcome news to creditors across the Nortel globe as well as to the Courts, who have taken every opportunity to urge the parties to find common ground.

"This is an enormous step on the road to conclusion. It is very much hoped that the distribution of funds to all creditors everywhere is now genuinely within sight. The former employees of Nortel, in whatever country, who created its wealth, many of whom are elderly and vulnerable, have waited a long time for the end of this battle. The current consensus is the fruit of ceaseless efforts by the parties across many months since the trial judgments came out last year. The Trustee is very pleased that through hard work, good faith and determination, it has been possible to reach a compromise of this long-running dispute. It is grateful to everyone who has played a part in getting this far."